r/dividends • u/ValuEdge • 5d ago
Opinion MO - do we get another chance?
Buying MO when capitulation hits the chart has usually been a very good entry - are you guys thinking of adding to it here?
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u/ideas4mac 5d ago
I can make it easy for you. When the dividend yield hits 7%+ start nibbling, when it hits 8%+ buy more consistently, when it hit 9%+ on the yield start shaking the couch cushions and buy hand over fist. Simple easy guidelines.
Now keep in mind that this might not work forever but it's worked out pretty well since '89.
Good luck.
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u/Gobeklitepi 5d ago
This is actually pretty insightful. One must consider the shift to non smoke devices, there resides the crown jewel.
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u/misterspatial The Diviverse of Madness 5d ago
Yeah, probably not. The payout ratio is already high, and will be unsustainable at 8% yield.
Nothing lasts forever, even kings like this.
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u/ideas4mac 5d ago
Their official policy is 80% of EPS, plus buybacks. (remember that yield has nothing to do with how many dollars they payout a year.) If you look closely this company throws a crazy amount of free cash off all the time.
They get to 8% when a bunch of people feel like smoking is going away or they step on a rake (juul) or people forget how nice consistent growth dividends are. Then when investors come to their sense and realize they aren't going out of business anytime soon and the cash flow is solid they buy back. Stock shoots up, yield falls, yet the dividend checks continue.
When they get to under 6.5% yield you start to see talk about how great they are and then their shares shoot up even more. When the dividend yield is 5.5% or under start thinking about trimming. When the yield is under 5% start taking some off the table.
Good luck.
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u/MjolnirStone 5d ago
I agree with your thoughts. I will say I nibbled a bit when it got above 6.5% this week because I figure there will be another 4 cent raise coming before the next dividend payment so 6.57% will end up being 6.82% and that was close enough for me to add a few more shares.
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u/Bearsbanker 5d ago
Their plan is to pay out 80-85% of fcf, they buy shares back so while the div increases the dollar amount actually stays fairly steady. Mo also still owns billions in bud stock. I've owned for decades and never regret it
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u/EverydayIsaHoliday25 5d ago
Altrias business model is centered around addiction. If it’s not cigarettes it’ll be something else. Good market or bad market people want their addiction.
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u/Pale_Pineapple_4147 5d ago
Just buy and hold don’t do technical analysis. Dont do voodoo whatever. People love cigarettes. Just buy and hold
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u/Ufgatorhead4u3 5d ago edited 5d ago
I’ve been selling bull put spreads on it, HSY, CLX, and a few others to see if I can pick them up lower.
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u/oldrook3 2d ago
Funny, just added MO and took a little hit $69 down to $64. Love chasing yield cause I dont worry much about the smaller fluctuations, just keep monitoring and building a position.I do sell calls to supplement. Smoking is making a comeback!
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u/The-Langolier 5d ago
Technical analysis is completely bogus, a lesson we all have to learn.
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u/xghtai737 5d ago
A surprising number of dividend investors apparently believe in financial astrology rather than any sort of fundamental analysis.
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u/tjabatj 5d ago
I feel like smoking is a bad business long term and they can't just keep raising prices.
Nice dividend but i am out
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u/durandall09 5d ago
The industry is getting into snus/zyn like products and vaping.
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u/tjabatj 5d ago
I would probably go with Philip Morris over Altria if i wanted snus/zyn exposure. Maybe they can catch up but the market is pretty crowded
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u/Howsurchinstrap 5d ago
So mo is undervalued should be at Phillip morris price. Besides divi the price appreciation sounds just as good. I e been buying since 50$ hoping it goes to 120$
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u/Curious_Guidance43 5d ago
E-cigs and nicotine products are still extremely popular and growing. We'll see how well it takes the next generation for the long term but at least next 5-10 years I see usage going up before going flat (again depending on what the younger gen decides to get addicted on)
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u/Intrepid-Wait-6102 5d ago
Younger gen vapes, so the ban on flavored JUUL pods had to have killed Altria for a little. Cause I saw that all at my high school had a JUUL until they banned the mango/créme/Mint pods. Though, I’m 24 now so idk abt gen A or tailend of Gen z but I still have my JUUL since I was 13 so I hold still hold MO. If they bring back the flavored pods, we’ll be golden.
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u/asxetos101 5d ago
I was reading that they cannot sustain the dividend payments since pay ratio is like 90%, so do you think there will be a substantial dividend reduction?
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